41-Unit Syndication Deal Analysis With Terrance Doyle
The property reviewed in this Deal Analysis podcast is a 41-unit single-structure multi-family in the very competitive Highlands Neighborhood in Denver, CO. The property consists of 38 units with 1 bed and 1 bath and 3 units with 2 bed and 1 bath. This is the fifth VareCo syndication deal featured on the Denver Real Estate Investing Podcast. Check out the podcast episode to hear Terrance Doyle and Chris Lopez discuss the details of this deal.
Three Learning Options!
  1. Listen to the podcast “#271: 41-Unit Syndication Deal Analysis With Terrance Doyle” on the Denver Real Estate Investing Podcast
  2. Watch the YouTube video (at the bottom.)
  3. Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.

syndication property Denver
41 unit property in the Highlands Neighborhood built in 1963

Economic Environment: Excess Liquidity & Low-Yield

The low or negative interest rates set by central banks over the last several years have resulted in a very low-yield environment. Yields are likely to remain exceptionally low in most parts of the world for the foreseeable future. In fact, the US Federal Reserve indicated in September that it will peg interest rates near zero through at least 2023.

For income investors, hundreds of companies have cut, cancelled, or suspended their dividend payments in 2020 due to the COVID-19 pandemic. While some companies have since reinstated their dividends after suspending them for a time, the reinstated payouts are far less than what income investors had come to expect. 

In addition, massive liquidity has been injected by the US Federal Reserve and is unlikely to stop anytime soon. Fiscal stimulus from the Biden Administration is also expected to inject an estimated $3Tn to $4Tn (COVID-19 relief bill and infrastructure focused bill) into the economy.

Many investors currently have excess cash. In fact, U.S. savings rates saw massive increases in 2020 as household spending dramatically declined due to the pandemic. By January 2021, the U.S. savings rate had increased to 19.8% compared to just 7.6% in January 2020. 

However, seeking income in a low-rate environment is a huge challenge for investors who do not want to search for yield in riskier assets.

The VareCo recognizes that in this current economic environment, there is a lack of private investment opportunities that will provide quality yields for investors, on a risk adjusted basis. We believe that over the next 12-36 months, creating meaningful cash-on-cash yields for investors is crucial. To meet this demand, The VareCo has revised our 2021 strategy to provide our investors with consistent cash flow as well as upside on the investment when we exit the deal.

Acquisition Parameters

The VareCo’s goal for 2021 is to scale and do larger projects on a per unit basis. By increasing the number of units that are acquired, the amount of cash flow and upside that are distributable to investor’s should increase as well. In December, I sat down with some of the top brokers in Denver and shared The VareCo’s new list of buying parameters.

  • 70 units or more
  • Opportunity to increase rent by at least 20% after rehab
  • Stabilized property with occupancy greater than 90%
  • Immediate cash-on-cash return of 6%
  • C properties in B neighborhoods

There are two key differences on this list compared to previous years. First, is the size of the property. While The VareCo has been able to build a great track record with the smaller multi-family buildings, the larger buildings will allow the company to grow and be more efficient. Second, is acquiring a property with stabilized occupancy. By slowly renovating just a few units at a time, the property will be able to provide monthly cash flow to our investors.

Sourcing the Deal

This off-market property was brought to VareCo by a multi-family broker who reached out to me just a few weeks after I had shared The VareCo’s acquisition parameters for 2021. The broker knew that The VareCo owned property in the neighborhood and could make a quick decision. This particular seller was looking for a seasoned buyer who would be able to close in 30 days due to a 1031 reverse exchange deadline. The current buyer had to back out of the deal and was willing to assign the contract over to a new buyer.

Within 48 hours, the property was put under contract for $8.0M ($195k/door) with a 35-day close. The Team was able to negotiate a $125k price concession due to some deferred maintenance items. Although the property on its own does not meet the 70+ unit acquisition parameter set, the company currently owns 25 units (“Wyandot”) just 0.6 miles from the property, which when factored into the overall picture made this 41 unit property even more attractive. You can check out the Deal Analysis blog post or see the Bigger Pockets Real Estate Ride Along YouTube video. The combination of these two properties gets The VareCo to 66 units, just shy of the 70 unit goal. With 66 units, the two properties will be able to have full-time maintenance and full-time leasing which provides the economies of scale that The VareCo is seeking.

Denver syndication Highlands
The properties are both in A+ locations only 0.6 miles away.


The Wyandot property was the perfect case study and gave The VareCo a huge advantage as The Team already knew the market rents, understood expenses per unit, knew the scope of work (construction will mirror Wyandot) and had Wyandot appraisal come in at $271k/door. Without Wyandot as a comparable, The VareCo would never have been able to make such a quick buying decision nor be comfortable waiving appraisal and inspection contingencies. Due diligence included:

  • Phase I Environmental Study
  • Inspection + inspection from previous buyer – We were able to inspect the exterior of the property and two vacant units. Additionally, we utilized the previous buyer’s inspection report.
  • Sewer scope inspection
  • Rent Study and After Renovation Value (ARV) – Wyandot provided a very strong case study for ARV
Denver syndication comps the Walcott
Denver syndication comps Eliot Flats
Denver syndication comps Highlands 32
sales comps Denver Highlands syndication
Rent and Sales comps from the investment memorandum. Reach out to The VareCo for all the details.
before and after photos Denver multi family renovation
Before and after photos of Wyandot property.

The VareCo projects total construction costs of $835k ($20.3k/door) which includes a new roof, new windows, new sinks, new appliances, new countertops, new interior doors, interior and exterior paint, art mural, and interior updates throughout the unit. Many of the interior finishes will mirror the Wyandot property. 


For this deal, we chose to go with a local bank that knew the neighborhood and coincidentally had also financed Wyandot. It was key that the bank would be able to close on time and we therefore went with a bank that The VareCo has a solid relationship with and had closed many deals with rather than the bank with the most aggressive or favorable terms.


  • 75% LTV at 4% interest only for 30 months
  • No prepayment penalty

Capital raised by investors to fund the syndication was used for the remaining 25% down payment and the projected $835k construction costs. 

Execution Plan

The renovation plan on this project is to renovate five units at a time with a timeline of four weeks for construction and four weeks for leasing, for a total of 8 weeks of vacancies. However, with the leasing team in place and a show unit to attract potential residents, The VareCo is optimistic that many of the units will be leased with increased market rents even before the construction is completed.

The VareCo plans to keep occupancy as high as possible during the renovation period. The goal is to always have at least 30 units or more paying rent to ensure cash flow to our investors.

There are two options once the project is stabilized. The VareCo projects a sale of the property in the two to three year mark. At that time The VareCo projects total monthly rents to have increased by 150+% and monthly net operating income (NOI) to have increased by 200+%. If the market is favorable, The VareCo expects to have a strong exit, and our investors will be able to generate a great multiple on their capital invested.

The second option is to keep the property and refinance the loan with a 30 year amortization. Once the property is stabilized The VareCo projects a 9-10% cash-on-cash return for our investors.

Both options provide strong financial returns to our investors.

Key Takeaways

Regardless of the stage of your investing career, stick to the fundamentals: 

  • Be able to communicate clearly to broker’s what you are looking for in your next deal
  • Plan ahead of time to ensure you have the necessary equity 
  • When a deal comes through that meets your criteria, move quickly and execute.

Note to readers: the above figures and return data metrics are strictly for the purpose of education and do not represent actual data or return values. Investing in Real Estate involves a high degree of risk and is appropriate only for investors who can afford to sustain a loss of their entire investment.

U.S. savings rate https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=3&isuri=1&1921=survey&1903=76#reqid=19&step=3&isuri=1&1921=survey&1903=76

Find more Denver Syndication Deal Analyses here.

YouTube Video: 41 Unit Value Add Project in Highlands Neighborhood

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Terrance Doyle
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